Posted
by
timothyon Thursday November 29, 2012 @11:55AM
from the rising-tide-lifting-boats dept.

dcblogs writes "IBM has 112,000 employees in India, up from 6,000 in 2002, with an average wage of about $17,000, according to an internal company document. That wage level may seem shockingly low to U.S. IT workers, but it is in alignment with IT wages in India.The Everest Group said the annual wages generally in India for a software engineer range from $8,000 to $10,000; for a senior software engineer, $12,000 to $15,000, and between $18,000 and $20,000 for a team lead. A project manager may make as much as $31,000. IBM employs about 430,000 globally. According to the Alliance at IBM, the U.S. staff is at about 92,000. It was at 121,000 at the end of 2007, and more in previous years. It has been widely expected over the past year or two that IBM's India workforce was on track to exceed its U.S. workforce, if it hadn't exceeded it already."

Actually, we've seen some of that at my job - in India we either get job attrition or requesting raises. This has caused a lot of jobs to be outsourced again, to China, where we get 4-5 workers for each US worker instead of 3-4. And the best part about it is the US was paying us to do it when US employees get replaced. Not sure about the current situation, as my company is now owned by Germans (we probably don't get as much US help to outsource anymore).

I have never really understood why many Americans are so hostile to unionization. There appears to be decades of brainwashing in action and mythos regarding correlation between hardwork and financial success.

Brainwashing. 60 years or so of brainwashing, with it kicking in, seriously, in the late seventies. Then the active, overt support of the Republicans - Reagan's destruction of the Air Traffic Controllers' union was the opening assult. There's also offshoring....

Most Americans have become suckers: those that aren't overwhelmingly feel isolated, and as though "they're the only one". There's only a few of us who have any real "enlightened self-interest", though I think a lot more would go union if they were given a real chance.

We also need more socialists back in the unions, to make them honest again. After McCarthy & co chased them out in the fifties, some, like the Teamsters, were taken over for decades by the Mob; the rest, cowed, dropped all the social demands, and closed down to cover only working conditions, wages, and employee benefits, and started acting like the midieval guilds, whose purpose was to keep more people *out* of the busines.

I have never really understood why many Americans are so hostile to unionization. There appears to be decades of brainwashing in action and mythos regarding correlation between hardwork and financial success.

I think there's more to it than that. The sad fact is that in way too many cases, US unions became little more than protection rackets, where in order to get anything done one had to accept high levels of incompetency, featherbedding and lollygagging, not to mention instances of leadership by mob goons. Even at the height of unionization in the US, the majority of the workforce was non-unionized, and what they saw of organized labor did not generate much sympathy.

Myself, I am quite sympathetic to the idea of workers organizing for greater leverage with their employers; however, every experience in my working life I ever had that brushed up against unions gave me the impression that they rarely brought any value to the table for anyone but them. It's a common perception, and perhaps that view is colored by brainwashing and mythology but there is more than a grain of truth to it.

Or as a wiser man than I put it:

Once upon a time the idea was good
If only they'd a done what they said they would
It ain't no better, they's makin' it worse
The labor movement's got the mafia curse

What I get from postings is that there is a difference between a unionized and non-unionized companies and also that you can not choose your union in the US.

I live in Belgium and if the company has 50 people or more, there must be elections to have a union rep. Where I work we have less. I am member of a union. I have no idea who is or isn't and neither does my boss or HR department, nor do they care.

I can choose which union I go to or not be in the union anymore. The same laws will apply. The same rules will apply. Irregardless if I am in a union or not.

It's not so much the rags to riches stories, it's that unions are far from perfect.

1. Unions like all power structures start acting in their own interests and not the people they really represent, just like corporations or governments. That may mean generous benefits for the union leaders, making life miserable for non-union workers and in the worst cases it's a possibility for bribes and corruption.2. Collective agreements typically means those who contribute less than average get more than they deserve an

Look at Hostess...the company was forced to close its doors and go bankrupt. The unions would NOT negotiate or budge enough on their demands to allow the company to continue. Rather than the unions negotiate...they stood their ground, forced the company into bankruptcy, and ALL jobs with them are now gone forever.

Whoa up there. Hostess went through 2 bankruptcies and 6 CEOs in the past decade. They went on an acquisition spree, bought a load of their own stock and went in debt to do it. Then they laid off half their people. The union agreed to big concessions at each step along the way. During the second bankruptcy, Hostess promised to modernize their plants. Instead, they lined the pockets of the CEOs and board. The union realized the company was being run into the ground and dug in.

Much of what the union rightly worked for in the early days...working conditions, hours..etc...were long ago accomplished and codified into employment laws.

A week or two ago there was a discussion about software engineer unions, and from my perspective it seemed that more comments were against unionizing than were for it.

Unions are socialist or collectivist and America doesn't really do socialism or collectivism. Then individual Americans wonder why they get shafted by their employers in the name of free market efficiency.

Yeah, FSM forbid people want to be paid a reasonable wage and be able to survive not only now, but retire sometime in the future and even have healthcare. The gall of some folks to be expected to be treated like humans. Everyone knows only C level executives should get those sort of benefits.

Corp taxes are almost nothing. No company in the US pays the supposed "highest corporate taxes in the world." The tax rate is purposely set high to force companies to broker deals with municipalities, states or the federal government. Some one, some where is getting a kickback to give the real, very low tax rate that is actually paid.

The fact is these multinational companies are protected by the US government. We have our patent laws, IP laws, civil court system and other apparatus that protects busi

I'm going to go ahead and challenge you on the word "capable", in a way outsourcing to India creates such poor results that the ongoing maintenance of crap that comes out of there is job security for us here in the states.

A lot of companies are catching on though and bringing development back to the states and if they outsource it's typically to a U.S. consulting firm. I'm pretty sure that every last line of code imported from India needs to be burned with fire.

I don't think you understand. What business is going to be able to afford IBM's computers? Who are those businesses going to sell their wares to when everyone is making $17,000/year? Expendable income will essentially drop to nothing with wages that low.

It will be similar to the events that happened in the United States. Basically, we used to have a wild difference in median incomes by state. There is still quite a difference, but nothing like existed before the interstate highway system. State importance decreased and more people viewed their identity in terms of country than state.

I see the same thing happening on a global scale. There will be rich countries and poor. Folks in the US are going to have to get used to not being the prima donna by default. Other countries will get much richer. We'll get a much more stable world, and one where country doesn't matter as much as it does today.

Is it painful? yes. Will there be losers? Yes. But I think there will be many more winners than losers.

But here's the thing, the economists say that the pie gets bigger and as a result, everyone's living standards increase.

Yes?

But, in the US, our living standards have been decreasing for over a decade.

What the economists seem to miss is that at least in the near term, the World's economy can't grow fast enough to compensate for all the billions of people entering the World's economy. In other words, wages have nowhere to go but down. Add in technology - like communications being dirt cheap - and we'r

But, in the US, our living standards have been decreasing for over a decade.

Yup. Basically we don't invest in our infrastructure, spend idiotically on wars instead of on our own people and expect our lifestyle to stay the same. We deemphasize education, performing below our peer group and expect our lifestyle to stay the same. I'd argue that the fact our lifestyle is dropping is proof that globalization is working as it should.

We have real problems in the United States that were masked by the fact that we were the world superpower and came out of WW II relatively unscathed. Global competition is showing that we have some things to fix.

But, in the US, our living standards have been decreasing for over a decade.

In my opinion this is primarily because the living standards of the middle class rose to absurd levels in the mid to late 1900s. Those levels of wealth for common laborers was never sustainable unless we kept most of the world at third world levels forever. What we are witnessing now is a drastic reduction in wordwide inequality. This inequality is mostly being erased because the poorest countries are getting richer, but a small amount of the equalization is caused by the rich countries becoming poorer.

Of course those whose income is based on their capital and investments instead of labor are making out like bandits regardless of if they live in poor or rich countries.

But here's the thing, the economists say that the pie gets bigger and as a result, everyone's living standards increase.

That's because they're economists and work in theories, not realities. Economics is zero sum because there's an effective limit on productivity and resources. Only localized economic interactions can be non-zero-sum.

Americans are rich because much of the world is poor. America's standard of living is declining for a simple reason -- a lot less of the world is as crushingly poor. Those people want their resources, and want to own more. In fact, America's standard of living would be vastly lower if there hadn

But, in the US, our living standards have been decreasing for over a decade.

Cite? Preferably one that doesn't equate median real income with standard of living. It's necessary to consider the dramatic decrease in price of many goods that were formerly considered luxuries but are now within general reach.

Just take a look at manufacturing jobs that have stayed in the United States to see the result of manufacturing done in an area with high wages. [Almost] Everything is done by robotics. The only reason they use less robotics in third world and developing countries is because their labor is still cheaper than machines. Robotics keeps improving while global wages keep equalizing, and at some point the use of robotics will be even cheaper than cheap labor is today.

Developing countries know they need to take advantage of this period in time, and use the money they are funneling from developed countries to improve their workforce so they can perform more skilled labor once this shift takes place. The US and other developed countries took advantage of the 1900s to do the same thing, and developing country's have much less time to advance than we did (but they have the advantage of riding our coattails). Unskilled laborers making decent wages will be a thing of the past on a global scale in the near future, just like what is happening in the US right now.

No, it is still just one of many careers with a bright future. Being well educated, hard working, intelligent, and using those attributes in a creative way will continue to be the path to job security. Until singularity that is, and I don't think anyone can credibly predict what will happen after that.

What happens when corporations can no longer exploit global wage differences?

The same thing that happened when 19th century England exported jobs to a poor third world country called "Germany". The wages in poor countries rise as their productivity increases. When their wages and productivity reach first-world levels, then they are no longer poor.

Unlike 19th century England today you can just keep outsourcing. India gets too expensive? Outsource to China. China too expensive? Southeast Asia, once that is too expensive, West Africa. Eventually you can outsource back to what used to be First world nations, but have slid into abject poverty.

We enjoy a higher standard of living because of global wage differences. Many countries do this. Let alone, having worked with individuals from said country, many found it easier to live on their home wages at home that supposedly equivalent wages here. Most of that came from expectations, I guess.

So your going to have to alter their society to increase their costs, one way to do that would be to keep pushing their wages up but that would introduce social instability as inflation would follow the new buying

If you want general manual labour the difference between india and the US is almost a factor of 50. For IT you're talking closer to a factor of 3.5 or 4. And indian wages are expected to grow at 13% a year on average, so by 2020 that 17000 could be more like 45000. Doesn't seem like much of a cost advantage anymore does it? For these guys, who are already earning more than 10x the per capita GDP (nominal) wage growth probably won't be 13%

What happens when corporations can no longer exploit global wage differences?

It's easy to spew vitriol at the 'evil corporations', but this is mostly irrelevant, and the reason becomes clear if you actually think about it for a bit... here's the thing, even if outsourcing by US corporations were totally banned, the existence of those 112,000 Indian individuals presently employed by IBM would amazingly enough not in fact just magically disappear into thin air. On the contrary, they would continue to exist. They would continue to have IT skills, IT qualifications, would continue to represent useful labor, and would continue to work for whatever wages make sense in the US context. However, the difference is that competing Indian-owned conglomerates would form instead, and the organization would compete with US companies, instead of being owned by US companies.

Which would you rather have, US-owned companies dominating global ownership of IT organizations, or US-owned companies becoming small bit players amidst even stronger global competition from hundreds of new "IBMs" all around the world?

The core of the "problem" is not really the demand side of outsourcing, it's the supply side of it: Because no matter how much we whine about it, a world full of skilled people simply isn't going away anytime soon. On the contrary, more and more countries have more and more universities and have increasingly skilled workforces.

What is really funny is back when we had very high taxes on top earners we saw real wages of the average person increasing. At the same time we were getting all that regulation you detest and we were actually ending a period of spending that makes today look like a joke.

Actually what really works is when Government is ineffective, with a mixed party ruling system. Like when Reagan and Dem Congress, Clinton and Rep Congress. Good news for Obama then, he has a Reb Congress, and they won't do anything and business can actually get stuff done.

The only Class Warfare in the USA is the rich against the poor. The thing is they are winning too. All the while accusing any poor who dares speak up of being involved in jealously based class warfare.

If you want evidence you need only look at the continual lowering of tax rates at the top of the scale, the shrinking real wages, and the jobless recovery.

Then watch IBM move to China to get ore cheap labor! American workers need to stop feeling so entitled to large wages and outrageous benefits. Then feel entitled to cheap products and services. Any company can't pay out money to employees in tons, then sell products cheaply and expect to succeed and make profit. Only when Americans change will they actually be able to find jobs.

From what I recall, tech support workers earned about $8000-10000, and new programmers may earn that little (and many intern for 3 months to a year), but most with 2+ years of experience are a bit more expensive than that. About 5 years ago, we were hiring average workers and it was around $15k-16k by my guesstimate, but due to poor quality and attrition I've heard we usually hire better workers and get about 2 for each US worker now, prompting a move to China, where we get 4.

In that scenerio, UPS/FedEx/DHL are the key components. Shipping product is much easier than ever, I can buy stuff from HK on eBay and get it in a week if they care to mail it out the same day. I no longer have to wait for my buddy to come back from Japan and his traditional trip to the Akihabara to see the latest gumstick sized IDE/SATA/Firewire/USB gizmo for USD22. I can probably browse their page and get it mailed. If they are with it, I can chat and avoid the Jinglish, mostly.

I understand that IBM wants to cut costs but with this scale work force migration to India, is that going to affect product quality ? I have worked with a ton of folks from India and I have absolutely nothing against Indians but I do see a difference in skill levels between American engineering grads and Indians (apart from those who come from the top institutions in India like IIT etc.) Most folks from India I have worked with are very sincere but they do not have a good understand of underlying concepts.

I know someone from IBM whose entire department was slowly shipped over to India.

What happened is they transitioned to a few managers in the US who knew how to manage Indian workers. The way to do it is to be able to give very detailed instructions on what you want the Indian team to build. So now they have a few managers in the US, managing the workers in India. Note also that IBM does have a few teams of very good programmers here in the US, the kind that work on things like Watson.

I agree with you, I am an Indian, worked with IBM on a global team, and was not involved in service delivery. But I don't fully agree.

The Indian education system is geared towards knowledge assimilation, not application of concepts. Therefore, you will find people who can rattle off the concepts, but cannot creatively use them. Also, it's also important to understand the business and social context of technology, and not just the spec list to really get to a point where you begin contributing into the next wave of what will be adopted into the mainstream.

What I don't really agree with is the statement around nights up leading to patchwork, since it generalizes everybody's individual capabilities into the same bucket.

As for the critiques, I have seen American IBM workers that are:

1. Not willing to take up a responsibility that does not fall into their core mainstream. Read - not willing to take a risk unless it means a career move. At least Indians are willing to learn. And if the quality of work is so low, then it's because the American guys were not willing to take a risk and learn something new, so new hiring would need to happen.2. "It's 6 'o clock EST and I'm going home. I don't care how important your deadline is, I've got other things to do" - Indian peers are far more accommodating3. "I don't care about scheduling calls at 2 AM your time because I know you are cheap labor willing to be exploited" (actually most of us are, because you can't afford a house, car, family, life and any semblance of a vacation expense on an Indian salary with a single breadwinner for the family, so we try really hard not to screw up)

The rate of interest for a home loan here is around 11%, the bank does not give you more than 80%, the rate of interest of a personal loan is around 21% (including all components that you pay) - contrast that with your housing market. In the current market here, the property rates are around $90 a sq.ft. A simple calculation will tell you that someone making $17000 simply cannot afford to buy a 900 sq. ft house here anymore. 900 sq. ft is a pigeonhole compared to the houses you live in. And that is the state of the relatively more skilled people in the Indian workforce. Do you blame us for trying hard to please our employer? That is the reason we work nights, and take risks to learn new stuff. At least we're willing to "ramp up"

For a parent to send their sons and daughters to even an average institution (read not Yale) means their entire life's savings. I didn't have lab access to a DSO in my college, so I improvised with pspice - some of my peers were not so resourceul, maybe you refer to them when you talk about lack of concepts. And you are right. RTFM is key - not a lot of Indians do that (they try the RTFppt route, but ppts don't really say that much).

There are far too many people here, too much competition, and too few avenues to succeed. You guys don't know how easy it has been for you so far. Shouldn't blame the world economy for catching up.

I'd love to see an objective measurement of IBM's quality of service from 2002 to now, mapped against the shift to a majorly offshore work model. I work for a subsidy of a very large consulting competitor of IBM's, and are witnessing the same phenomenon - more and more offshore workers tacked on to project teams that just drag everything down. The more offshore we're shackled with (and I really mean that - we're given no choice by service line leadership) the worse we are able to deliver on our projects.
The biggest issue for me is that once we've been able to identify the offshore rockstars - the fabled guys you can actually work well with, trust, and receive good quality work product from, they either get instapromoted to management or realize they can get more than just the 17k/year salary or whatever it is they're getting and GTFO. Either way you don't get to work with them for long. Then you get whoever's free in the pool when you're building a project team - no calling "dibs" on the right guys for the job. Quite often you just get a warm body who isn't familiar with the tech you're working with, the processes of project delivery, or will refuse to perform any work unless you have mapped it out to the click.

By decree, we are ordered to use outsourced programming. Our core competencies are seen by our company as industry specific and coding talent is seen as general talent, like a secretary. So we end up outsourcing a lot to a firm in India.

And what we got was crap. Now the fault is not entirely theirs. But in speaking in areas where they are at fault... The code is crap. I am in charge of audting the code we get back from them and it is mind boggling bad. To understand this more, I inquired to what schooling the "engineers" had gone through. It was about trade-school level, above high school but AA degree at most, which is not sufficient given the liabilities in our industry. Still 5 coders for the price of one domestically should still have some benefit? Well a lot of that got eaten away by the QA procedures that had to be put in place. Now the code we get is tolerable, and the Indian business is on track to (if they take additional clients) become an actual Indian Business Machines. Still there are enormous challenges. After going through all the effort we did to get usable code form the relationship, I'd rather have just hired a couple domestic coders. But we would not have the QA team that they now do. True, we would not have needed it, but now that it exists it is reusable. I am not allowed to see how much internal strife there is, I only get to see what their approved output (after QA) is so I don't know how much churn there is. What I do know is 5 $20k Indians still do not equal one $100k domestic engineer.

Unless your company can weather a rocky start of a relationship like this (who can these days, especially when things are outsourced to be done faster) I don't recommend outsourcing. We still won't let them in our core code base because we need expert code, but they are free to write extensions to the core.

Yeah, it would be so much cheaper if they could maim workers and show them the door, dump enough pollution into rivers to make them flammable and lock the factory doors during working hours. These days they even expect you to pay overtime and not physically/sexually abuse your workers! They used t do all the stuff before that troublesome over-regulation . I think you know that period as "The good old days".

Nope. I'm a CEO. What does get your job done faster though is hiring that really bright coder 12 timezones away with good English skills at local prices that are "sky high". Intelligence isn't limited to the USA and grabbing that talent before it fleas to a country with better conditions can pay off big time!

Well, this is likely to get me marked troll, but...

Somehow I'm doubting your Ivy League Education which landed you your position as a CEO.

Perhaps it's your spelling of "flees" as "fleas".

You strike me more as a somewhat less educated sock puppet, and/or a non-native English speaker who has not bothered learning English well enough to communicate at the level a CEO must communicate in order to be an effective show pony for the board of directors. Nice attempt at passing yourself off as a CEO in the US, tho

And the end game is always the same. The smart guy learns what he needs to get the job done, is connected with the customers and soon figures out that he doesn't need a "CEO" slurping up the cream. That's also how IBM lost the Space Shuttle Software Development contract to Ford Aerospace. They didn't seem to learn from that either.

Yet those laws made everyone's life better and increased the buying power.

it did so temporarily, now we are going to loose it all because there aren't/won't be any jobs left here

Who are you going to sell your goods if no one has enough money to buy fancy stuff?

You have it backwards. They have stolen all of the US's manufacturing and are stealing our intellectual jobs, so no jobs for us in the US. In the mean time we bought all of their crap and none of our own supplying them with all of our money. So we have no source of income and we continue to lose money because we are sending it all to China and India. Our economy is now collapsing, they have all of the mon

In the mean time we bought all of their crap and none of our own supplying them with all of our money.

For over a decade, consumer goods got really cheap compared to how they were in the 1990s. This was the boom in third-world manufacturing in India, China, Brazil, Mexico, Indonesia, Thailand, Vietnam, etc. It mirrors the boom in Japanese goods that enhanced lifestyle in the late 1960s and 1970s.

Like all bubbles, it popped. The post-1990s bubble is popping very slowly, but it's going. And when it does, the

This didn't happen because of regulation alone. It happened because banks were encouraged to loan (i.e. create) money by issuing more and more debt (i.e. loans). The economic "growth" since the 1970s has been almost entirely debt-driven. This is obviously not sustainable and will one day lead to massive defaults at all socioeconomic levels.

At that point, things change. Personal wealth is defined largely by the wage/price structure ratio. If prices in the USA approximated t

Wallstreet doesn't like it, they want Costco to lower the wages to the minimum to maximize short-term profits because just growing and making a decent profit ain't enough for shareholders... except Costco shares have gone up despite warnings from Wallstreet.

Wallstreet loves to squeeze everything to generate the max profit for shareholders this quarter... next quarter? They will will find another company to squeeze.

IBM can well outsource all the work but what happens to the knowledge? What stops an Indian company hiring IBM workers and creating Indian Business Machines? That is after all what Japan did with car production? First you make the parts, then you put the parts together and then you make your own parts and put them together and how is Detroit doing again?

Americans love blaming unions but North-West european countries (UK does not count) have strong unions and no problems with them. The Dutch Polder model was widely praised until right-wing POLITICIANS destroyed it, much to the chagrin of the supposed right wing business owners who just want to make a deal they can count them even if it costs a bit because uncertainty is WORSE for business then knowing a deal is going to cost you a fraction of a percent more in salaries.

The US needs to get over its love for Wallstreet, it is a leech and NOT a job creator.

You know the really funny thing? In Season 22 of the Simpsons we learn that he makes 70k a year... yet he is often shown in the series as a "poor" man who can't afford health care... 70k that is what its writers consider a low wage on which you can barely survive and are always struggling.

It shows you just how big the divide is. Wallmart workers make 24k a year if they are lucky. Costco make 50k. Both companies turn a profit. Which one do you shop at?

In much of the country $70k a year will put you in Homer Simpsons shoes.

Depending on your employer healthcare may well be out of reach at the wage, or at least a very big chunk of it. A few years ago I almost switched jobs for a rather large pay increase, tens of thousands, the increase in healthcare costs made the raise nearly pointless so I did not change jobs. I would have come out maybe a couple thousand a head, but would have gone from 19 days vacation to 5.

Amen brother! Let go back to the good old days when an employee that lost a hand in a machine could be shown the door and children were allowed to work 60 hours a week. Ahh... Even the the good old days of the 1950s where life expectancy was 20 years less so there was no need to take care of those useless old folks. No do-gooder social justice freaks trying to make sure people could eat once a day. Let's go back to the days when business was allowed to dump TCE and dioxins into aquifers and people had n

Still depends on the state you're in. In New York, $80k is indeed a pittance, but in, say, Georgia, or Kansas, both of which have large cities, that would probably be a really nice wage. It's definitely more than I make; I'm a network/systems/SAN administrator in a very densely populated mid-atlantic/northeastern state, we have over 50 servers and around 4,000 users or more, point being, it's not a ma and pa shop I work for. Then again, most of my peers do make more, they bargained better than I did when

I lived in downtown Atlanta for over a year while in grad school, and rent on my apartment was only $900 a month, in a good area of town (Inman Park). I had a friend living in Virginia Highlands that paid only about $500 a month (my apartment was better, but hers wasn't bad). With a roommate, living downtown in Atlanta is even cheaper. And for the record, right now I would kill to even make half of $80,000. In fact, I'm only asking about $30,000.

Yeah, last time they offered me a software engineering position, it was for $30K a year less than the manual tester position I was in at the time. That was only three or four years ago, and they'd already lost everything that made them such a desirable company to work for. They might have been able to offer significantly less than market back when they had awesome benefits and a pension plan. That stopped about the same time that their philosophy that "We answer to our employees, our customers and our share

Except that a rupee buys five times as much in India as the exchange rate suggests. So it is more like making $85k. Manufactured products tend to cost the same in either country, but labor-intensive goods can be ten times cheaper or even more. It is common for an Indian to ride a bicycle, because they cannot afford a car, but they can still afford to pay a household servant to clean/cook/babysit.